Meaning of interest cover

 

 

 

Interest cover

 

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Business glossary

 

Meaning of term interest cover :

 

The interest cover ratio is a measure of how easily the firm can meet the interest payments on any debts that they have. It is calculated by dividing the profit before tax and interest by the amount of interest paid. A figure of one would therefore mean that the firm would need to use all its profit to pay their interest. The lower the figure the more easily the firm can cover their interest payments.

 

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Interest cover

 

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Meaning of term interest cover